Sunday Read: Stop Russian Oligarchs!

This overview of whistleblowers’ role in combating money laundering and tax fraud was sent as part of NWC’s Sunday Reading series that aims to educate supporters about specific whistleblower legislative or policy initiatives. For more information like this, please join our mailing list.

On March 24th, Representative Adams (NC-12) showed commitment to whistleblower rights by introducing a bill amending the Anti-Money Laundering Act of 2020 (AML). This bill is designed to provide security and stability to AML whistleblowers by ensuring they would be rewarded for their courageous contributions. Rep. Adams action is significant as AML provisions are critical to U.S. sanctions fighting to stop Russian aggression in Ukarine. This legislation, in combination with the IRS whistleblower program, serves to bolster the fight against corruption, both domestically and abroad.

In this Sunday Reading, we will examine the importance of the proposed revisions to the AML law and how important whistleblowers are to the success of key sanctions safeguarding our democracy.

Existing AML Whistleblower Protections Need Improvement:

As it stands today, the AML whistleblower program is not properly funded, meaning it cannot adequately incentivize whistleblowers to come forward. While compensation is discussed in the original bill (Sec. 6314 of the AML, division F of Public Law 116–823), there is no guarantee that whistleblowers will be compensated for their dedication to the public good. Unlike programs like the Dodd-Frank and False Claims Act, this whistleblower protection program fails to consistently have funds available to pay whistleblowers. This program also does not guarantee a mandatory reward to whistleblowers, a practice that became standard in 2012.

It has been shown that these whistleblower programs are very effective in exposing misconduct around the world — resulting in billions of dollars recovered by sanctions. In 2021, NWC advocated for a more secure program for whistleblowers disclosing money laundering urging Congress to revise the AML law so that whistleblowers would be better protected — but Congress did not take action for whistleblowers then, and today we see wealthy criminals destabilizing the economy and global democracy.

What is Changing?

The proposed changes institute a robust way to pay whistleblowers for their contributions to sanctions made. This change will create a fund that explicitly states that it can only be used to pay for whistleblower awards. It is also outlined that there will be a minimum of 10% of what is collected in sanctions awarded to the whistleblower, a growing standard in various whistleblower programs.

If the fund does not have enough money to issue an award to a whistleblower, the remaining portion will be taken directly from the sanction collected by the appropriate official, either the Secretary of the Treasury or the Attorney General. This provision will bolster whistleblower confidence, especially when the whistleblower has information about a large-scale violation.

These provisions would be a major improvement to current legislation, where there is no description of a minimum award, differentiating the AML whistleblower program from successful and well utilized programs which include minimum mandatory awards, significantly taking away from strength of the program. If this bill is passed, whistleblowers will be more likely to speak out against illegal activity which would otherwise be difficult to detect, a process with a history of benefiting the public good.

Rep. Adams’ Bill is Timely!

In December 2021, President Biden released the United States’ first anti-corruption plan. In the plan, the President noted that it would be important to enlist AML whistleblowers to stop trans-national illegal activity. Protecting whistleblowers on the global scale was described as a priority: the plan states that “[t]he United States will consistently apply criteria across countries specifically related to transparency, accountability, and anti-corruption, including around the protection of journalists and whistleblowers”.

Today, it is critical to incentivize whistleblowers to report money laundering activity. Referring to the international scene, the swift passing of the AML revisions would assist U.S. efforts in its placement of sanctions against Russia. These actions not only impact whistleblower decision making, but violator’s decision making as well. Fearing detection, Russian Oligarch will be hampered, the likelihood of engaging in financial crimes decreases.

The U.S. response to Putin’s war against Ukraine would be greatly aided by whistleblowers who have inside information concerning the violation of these sanctions. In tandem with the IRS whistleblower program, AML whistleblowers are essential to strengthening economic sanctions against Russian oligarchs that support President Putin.

The AML enhancement we’ve discussed is identical to one introduced in the Senate by Senator Grassley on December 6, 2021. In the past five months, there has been no action taken by the Committee on Banking, Housing, and Urban Affairs, where it was referred to after being read twice by the Senate. This shows a lack of cohesive action by our government, where Congress is displaying a lack of priority for the enhancement of whistleblower incentives. In the meantime, Russian Oligarchs have continued to illicitly move their assets around the globe without fear of detection.

Support Whistleblowers:

Whistleblower disclosures would reduce the ability to evade economic sanctions, more deeply affecting the financial system that ultimately supports the Russian forces in Ukraine.

NWC strongly believes that it is critical for the public to be aware of legislative efforts as they occur. Being able to voice your opinion to the public officials that you elected is an important part of our democracy, and should not only be cherished, but also advantaged to support causes you are passionate about. Please spread the word and encourage your friends and colleagues to join our mailing list for more information like this.

Learn more about how whistleblowers can help stop Russian oligarchs by watching NWC’s Tax Day panel on LinkedIn, where panelists discuss the importance of whistleblowing related to stopping the Russian invasion of Ukraine. Please share this article and donate today. Thank you for reading this week’s publication of the Sunday Reading series.

This story was researched and drafted by NWC Intern, Shawn Robbins, a Sophomore double major in Economics and Sociology at University of California, Irvine.